Walgreen company man rises to top

Gregory Wasson, president and CEO of Walgreens

Michael Tercha/Chicago Tribune

Walgreen engineered a $6.7 billion deal to buy a stake in European pharmacy and health-and-beauty retailer Alliance Boots GmbH, which Walgreen President and CEO Greg Wasson called "a once-in-a-lifetime brand."

Walgreen engineered a $6.7 billion deal to buy a stake in European pharmacy and health-and-beauty retailer Alliance Boots GmbH, which Walgreen President and CEO Greg Wasson called "a once-in-a-lifetime brand." (Michael Tercha/Chicago Tribune)

Greg Wasson gambled away a total of about $60 during the 2 1/2 years he lived in Las Vegas. All of it came while he was parked at some low-stakes slot machine, waiting for his out-of-town guests to wrap up their requisite casino visit.

Wasson, 53, says he doesn't have the stomach to gamble.

But since the small-town Indiana native rose to the top job at Walgreen Co. in February 2009, he has been earning a reputation for making big bets and taking risks.

First came the 2010 acquisition of the New York-based pharmacy chain Duane Reade Inc. for $1.1 billion, which at the time was the largest deal completed by the traditionally conservative Deerfield-based drugstore operator.

In early 2011, Wasson shelled out $429 million to buy Drugstore.com, a deal meant to augment Walgreen's online presence.

Late last year, he made the decision to walk away from more than $5 billion in annual business tied to the pharmacy benefits manager Express Scripts Holding Co. Voluntarily.

Investors sent Walgreen's stock price tumbling, but Wasson insists the decision was in the long-term interest of the company.

Last week, Wasson upped the ante again.

For the first time in its 111-year history, the nation's largest drugstore chain moved to expand beyond its North American footprint, with a $6.7 billion cash-and-stock deal to acquire a 45 percent stake in the European pharmacy and health-and-beauty retailer Alliance Boots GmbH.

The deal, expected to close by Sept. 1, will create the world's largest buyer of prescription drugs, with a network of 11,000 stores in 12 countries.

It includes an option for Walgreen to take full control of the Swiss-based Alliance Boots in about three years for an additional $9.5 billion in cash and stock and the assumption of the company's substantial debt.

In the eyes of Walgreen investors, it's a risky bet. On the day the deal was announced, shares of Walgreen stock dipped 5.85 percent. A day later, shares fell nearly 3 percent. Walgreen stock closed Friday at $29.57, up 42 cents, or 1.4 percent, after Wasson defended the Boots move in a meeting with investors. He called it "a once-in-a-lifetime brand and asset that could set this company up for the next 10 to 20 years."

Wasson faces the monumental challenge of stitching together two blockbuster brands with long, separate histories at the same time he is reinventing his business at home.

Whether the string of deals pays off might well define Wasson's career.

A fast-moving world

Since Wasson graduated from pharmacy school at Purdue University in 1981, his life has been consumed by all things Walgreen.

He started as an intern gofer, took his first job there as an assistant store manager and never looked back.

He now spends most Saturdays holed up in his airy fourth-floor suite in a suburban office park in Deerfield. Members of his executive team are expected to be at his side.

At night, he goes home to his wife, Kim, who spent 17 years working for the company. His younger brother, Brad, has carved out a 30-year career at Walgreen. A sister, Terri, manages a Walgreens in Chicago.

It's not uncommon for him to send his deputies emails after midnight.

"Guilty," he says.

When he picks up a book, it's almost always a nonfiction work about health care or a biography about successful political or business leaders.

Even when Wasson retreats to his property on a private lake in southern Indiana for a respite with his family, his baggage usually includes two "big items to think through," each related to Walgreen.

"There's just too much to do," said Wasson, who is stoic, yet warm. "The world is moving too fast."

Kim, his wife of 31 years, says her husband never stops working but once in awhile manages to toil in "a relatively relaxed manner."

"He's got one of those minds that's going all the time," she said. "Luckily, he's got so much to do at Walgreens that, in a funny sort of way, that's good for him. It's healthy for his mind."

Reinventing stores

Amid the most dramatic overhaul in the U.S. health care system in 50 years -- and at a time of unprecedented upheaval in the industry that works in the space between his pharmacies and insurance companies and employers -- Wasson is leading Walgreen through a massive reinvention.

Much like he did with the Duane Reade deal in 2010, Wasson is hoping to co-opt the best innovations and forward-looking strategies employed by Boots' 3,300 stores and implement them in his nearly 8,000 Walgreens.

Wasson wants his stores to be known as a destination for "health and daily living." He wants his customers to take their medications as prescribed. He wants them to go in for immunizations and vaccinations. He wants them to turn to store pharmacists, nurse practitioners and doctors for primary care.

In short, Wasson believes Walgreen can and will play a much larger role in the delivery of health care.

Walgreen has built or converted about 200 stores, including its flagship in the Loop, to so-called Well Experience stores with additional medical staff. It plans to convert 200 more by the end of the year.

"We think we have a tremendous opportunity to roll out new and unique services to patients," Wasson said. "We can really help fill in some of the gap in primary care and access to health care in this country. It's good for our patients, and it's good for us."

An early education

Gregory David Wasson was born in 1958, the second of five children of Richard "Dick" and Phyllis Wasson.

He spent his first years in Delphi, Ind., a speck of a town about 100 miles southeast of Chicago. Dick Wasson built some savings and bought a plot of farmland a few miles north of town.

Dick Wasson, who sold roofing, siding and other housing materials, then bartered with a neighboring farmer to swap part of his farmland for a wooded area overlooking a nearby lake.

"There was literally nothing there," Brad Wasson said. "It was just some woods and an old abandoned house than hadn't been lived in for decades."

Dick Wasson saw something bigger: the perfect place to start a family-run campground. He dubbed the little bluff Walnut Ridge and figured people would pay a few bucks to stay for a week at the lake.

The enterprise turned a modest profit and served as the Wasson boys' first lesson on how to run a business.

"He'd say 'Hey, Greg, find something that people want, put a fair price on it and service the heck out of it,' " Greg Wasson said.

Four mornings a week, one of the three Wasson boys would get up about dawn to mow the lawn in sections. Afterward, they'd drive around to campsites, selling bundles of firewood they had chopped.

A teenage Greg Wasson managed waste collection -- that is, the draining and disposal of sewage waste harvested from holding tanks in the parked campers.

"We worked really, really hard, but we just didn't know anything different," said Brad Wasson, who is group vice president of Walgreens Health Systems Solutions Group. "We didn't realize we were running a business, but we were learning very basic leadership and relationship skills."

In his spare time, Greg Wasson also worked for the farmer next door, baling hay and doing other chores as a teenager.

"My dad taught me two things: Work hard and be humble," he said.

Although neither of Wasson's parents attended college, they expected each of their children to pursue an education beyond high school. All of them did. Wasson had a couple of relatives who were pharmacists, and they steered him to Purdue University's College of Pharmacy.

There, he met Kim, who was in the same program. They skipped their college graduation ceremony to get married. A day later, they loaded a U-Haul and drove to Houston.

Three days later, Wasson started his first job in a Walgreens, in management training, a job suggested to him by Jerry Karlin, whom Wasson met during a college internship at Walgreen's corporate headquarters.

Wasson had told him, "he was very interested in going somewhere he could learn and get ahead quickly," Karlin said.

Within four months, Wasson was managing his own store.

At the same time, Kim Wasson started in a Walgreen pharmacy, and she also rose quickly to manage her own store.

"She had a very strong reputation, and people in the company were impressed with her abilities and saw the potential for something more," Karlin said.

Kim continued to work, on and off, with Walgreen for about 17 years before deciding to stay home full time with the couple's two girls.

After managing a series of stores in Houston, the Wassons moved to Milwaukee, where Greg became a district manager at age 27, a position he called "intimidating" because many of the 30 or so store managers who reported to him "had been working in stores longer than I had been alive."

From there, they moved to Boston, where Wasson spent seven years managing a three-state region where Walgreen was trying to get a better foothold. He and Kim fell in love with the Northeast.

Then came another fateful call from Karlin, who was overseeing all Walgreens in the western half of the United States. He asked Wasson to manage the rollout of several stores in Las Vegas, a new market for Walgreen.

"We loved it in Boston. We were happy there. So when (Karlin) called, I kind of stiff-armed him," Wasson said.

A week or so later, the Wassons were driving to Smugglers' Notch, a ski resort in Vermont. It was late at night, and their two young girls were asleep.

The Las Vegas market became the top new-market opening in Walgreen history, blowing away sales projections and catapulting Wasson's profile in the company.

"That's when Greg became a star," said Karlin, who left the company six years ago.

Colleagues gravitated to Wasson, who was "soft-spoken, bright, sincere and humble," Karlin said. "Greg was like a little farm boy. He had a quiet gentleness about himself. He was very charismatic."

Wasson was promoted to a regional vice president of store operations in 1999 and three years later was named president of Walgreens Health Initiatives, which handled mail-order, specialty pharmacy and pharmacy benefit management services.

In 2007, he was promoted to chief operating officer, a position that traditionally had served as the springboard for Walgreen CEOs-in-waiting. That's when, Wasson said, he knew he was the "heir apparent" for the company's top job.

Tough transition

Wasson was handed the reins in February 2009, amid tumult within and outside the company.

The previous CEO, Jeff Rein, had resigned four months earlier after only two years in the job.

The economy was in a historic downturn, and Walgreen had just lost to rival CVS Caremark Corp. on a bid to buy a chain of more than 500 West Coast drugstores run by Longs Drug Stores Corp.

Walgreen stock was trading in the low-$20 range, down from more than $50 slightly more than two years earlier.

At the same time, Wasson had in his hands a real estate portfolio that any retailer would envy. Walgreen's focus the previous decade was "location, location, location." During that period, the company amassed some of the most valuable retail properties across the country.

But he also found a company doing little to leverage those prime corner locations.

Later that year, he began ushering the company through a wholesale restructuring and rebranding campaign with a goal of revamping the look and feel of its stores, expanding health care services and enhancing cosmetics counters and fresh food offerings.

He moved regional vice presidents out of headquarters and into their regions to shift some of the decision-making out of "the ivory tower" and into the hands of those closest to the business.

Trusted, trusting

He also empowered his executive team to tackle big decisions.

"The message from Greg is, 'You're in charge, and you better deliver,' " said Mark Wagner, Walgreen's president of community management, who oversees the company's retail stores and supply chain. "At the same time, we're all in this together. He's always got your back."

It's a view that extends to many of Walgreen's 247,000 employees, who often ask to take photos with Wasson when he visits their stores. Wasson always obliges.

Despite Wasson's penchant for shying from the spotlight, he is in it. And the glare isn't always kind.

Those closest to Wasson call him a visionary. But the Wall Street analysts who follow the company are less committal, often referring to his legacy as a work in progress.

Hanging over Wasson's head is the complex situation with Express Scripts, which parted ways with Walgreen on Jan. 1, taking more than 88 million annual prescriptions with it.

Three months later, federal regulators approved Express Scripts' $29.1 billion acquisition of Medco Health Solutions Inc., which put even more Walgreen business in jeopardy. Combined, the two firms accounted for about 213 million of the scripts Walgreens filled in 2011, about one-fourth of the total.

Although Walgreen retains its relationship with Medco, it's unclear what will happen when a contract between the two expires at the end of the year. Several analysts suggested that solving the situation should be Walgreen's top priority.

Whether Wasson's bold moves pay off "remains to be seen," said Matthew Coffina with Morningstar Inc.

"No one could argue that he's taking the company in a new direction, that's for sure."

Family: Wife, Kim, daughters Lindsay, 23, and Courtney, 21. Both followed their parents to Purdue University. Brother Brad and sister Terri Lhotka also work for Walgreen. Kim worked for Walgreen for 17 years.

Lives in: Long Grove

Loves: The desert

Hobbies: Visiting Walgreens across the country; watersports; spending time with his family at their lake home in southern Indiana. He ran the Boston Marathon twice.

Fan of: The Oakland Raiders; Bruce Springsteen

Civic involvement: Serves on the boards of World Business Chicago, the Field Museum, the Museum of Science and Industry and the Midtown Educational Foundation. Member of The Economic Club of Chicago, The Business Council, The Wall Street Journal CEO Council and the civic committee of The Commercial Club of Chicago. Chairman of the Illinois chapter of the American Cancer Society's CEOs Against Cancer.

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